Blog:Notes from a large island (Part 2)

Here in Australia, we have been seeing some pretty awful scenes on TV over the last week as the Chao Phraya River up in Thailand has inundated so many homes and claimed hundreds of lives. Now, the second phase of the tragedy is starting to have an effect with the news that an estimated 300,000 units of Thai vehicle production will be lost over the remainder of 2011.

A friend who works in a senior role at Toyota Australia tells me that there is about to be a major knock-on problem for sales of the firm's best-selling Hilux pick-up as well as several other models. Luckily for Toyota, Hilux production in Thailand is spread over two plants, Samrong and Ban Pho, while its other top models in the Aussie market, the Corolla and Camry, are sourced out of Japan and Australia respectively. There will, however, be some parts shortages for all those models. And the timing couldn't be worse, with production of the new-generation Camry and Hybrid at Altona in Melbourne due to commence in the coming weeks.

The market leader in this country might well be greatly concerned about the after-effects of the floods but things are far worse for Honda. The Ayutthaya manufacturing facility is the regional production hub for many Honda models and with that plant suddenly knocked out due to submersion, production of the Accord, Brio, City, Civic, CR-V and Jazz might well be stopped for up to six months.

It will be interesting to see what Honda does - take a hit on exchange rate losses due to the super-yen versus the Aussie dollar and other regional currencies by switching build of cars for Asia-Pacific markets to its Japanese plants or possibly, divert some production out of Indonesia (Fit/Jazz, CR-V), Malaysia (Civic), or possibly even China (Accord, Civic, City, CR-V, Fit/Jazz & Odyssey).

Given the startling complexity of obtaining a journalist visa for China - the code 'J2' is now indelibly stamped on my mind - it was with some surprise how swiftly I managed to sail through airport im...